Target Date Fund Investment Mix | Capital Group

An investment mix that changes over time

The investments in a target date fund change over time based on the target retirement date. This gradual shift is called a “glide path.”

Our objective-based glide path

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The target allocations shown are as of January 1, 2019, and are subject to the Portfolio Oversight Committee's discretion. The funds’ investment adviser anticipates that the funds will invest their assets within a range that deviates no more than 10% above or below these allocations. Underlying funds may be added or removed during the year. Changes in the equity allocation within the underlying equity-income and balanced funds may affect the overall equity exposure in the target date funds. For quarterly updates of fund allocations, visit AmericanFunds.com.

How a target date fund works:

  1. Significant stock investments throughout the lifetime of your fund can help manage the risk of outliving your savings in retirement.
  2. An increased emphasis on bonds as you near your retirement date can help manage the risk of market declines.
  3. A fund may continue to be managed beyond retirement, so you could feasibly use that target date fund for decades.

The benefit of saving for retirement

Target date funds make it easy to start saving for retirement. Of course, the longer you have to invest, the better your potential to realize your retirement goals.

See how contributions to your plan could add up over time:

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* This hypothetical example is for illustrative purposes only and does not reflect the results of any particular investment, which will fluctuate with market conditions. An 8% average annual return rate, compounded every two weeks, is assumed. Withdrawals before age 59 1/2 may be subject to income taxes and, if applicable, to a 10% federal penalty tax.

 For fund results or for information about your retirement plan, talk with your plan provider or employer, or visit your plan’s website.

 


 

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the mutual fund prospectuses/summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. Similar information about collective investment trusts can be obtained from Capital Group or participants’ plan provider or employer.

Each target date fund is composed of a mix of underlying investment strategies and is subject to the risks and returns of the underlying funds. Underlying funds may be added or removed during the year. Although the target date funds are managed for investors on a projected retirement date time frame, the funds' allocation strategy does not guarantee that investors' retirement goals will be met. The target date is the year in which an investor is assumed to retire and begin taking withdrawals. Capital Group investment professionals manage the target date fund's portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the fund gets closer to its target date. Investment professionals continue to manage each fund for 30 years after it reaches its target date.

Fund shares of U.S. Government Securities Fund® or Capital Group U.S. Government Securities Trust℠ are not guaranteed by the U.S. government.

Any collective investment trusts (“CITs”) available under the strategies shown are maintained by Capital Bank and Trust Company (“trustee”), which has retained an affiliate to serve as investment adviser to the trustee for the CITs.


Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries. Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks. 

The return of principal for bond portfolios and for portfolios with significant underlying bond holdings is not guaranteed. Investments are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds. Investments in mortgage-related securities involve additional risks, such as prepayment risk. While not directly correlated to changes in interest rates, the values of inflation-linked bonds generally fluctuate in response to changes in real interest rates and may experience greater losses than other debt securities with similar durations. 

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.